DaVita to Pay $389 Million to Resolve Kickback Allegations

The Department of Justice announced that DaVita Healthcare Partners, Inc. (“DaVita”) has agreed to settle allegations that it violated the False Claims Act and the Anti-Kickback Statute for $350 million, plus the civil forfeiture of $39 million. The allegations were first made in a lawsuit filed under the qui tam provisions of the False Claims Act by whistleblower, David Barbetta, a former Senior Financial Analyst in DaVita’s mergers and acquisitions department.

According to DaVita’s website, it is one of the leading providers of dialysis services to patients with chronic kidney disease and end stage renal failure. It has 2,119 outpatient dialysis centers in 46 states and the District of Columbia. DaVita is headquartered in Denver, Colorado and acquired Healthcare Partners, an operator of medical groups in several states, in 2012.

In his qui tam complaint, the whistleblower alleged that DaVita violated the False Claims Act by submitting claims for payment involving the referral of patients from physicians with whom DaVita had illegal kickback arrangements. According to the government, DaVita engaged in multiple complicated schemes to provide improper compensation to physicians to induce them to refer patients to DaVita’s dialysis centers. For example, the government alleged that DaVita identified medical practices with a significant number of patients in a specific geographical area suffering from renal disease and offered to engage in joint venture dialysis clinics to which the physicians groups would then refer their dialysis patients. The government claimed the joint ventures consisted of DaVita either acquiring an interest in an existing dialysis clinic owned by the physician or the sale of an interest in a DaVita clinic to the physician. The complaint stated that the physicians were often paid to serve as medical directors of the joint venture clinics. The government also alleged that DaVita entered into non-compete and non-disparagement agreements with the physicians in which the physicians agreed that they would not refer their patients to any non-DaVita dialysis provider.

The Anti-Kickback Statute prohibits offering or providing anything of value to physicians in order to induce patient referrals. DaVita has agreed to pay $350 million to settle the civil allegations of violation of the False Claims Act and the Anti-Kickback Statute. In addition, DaVita has agreed to a civil forfeiture of $39 million in settlement of the Justice Department’s criminal investigation.

The whistleblower will receive a percentage of the settlement proceeds as his reward under the qui tam provisions of the False Claims Act.